Controversial IT Ordinance Sparks Investment Hopes but Raises Serious Security Concerns

The latest IT ordinance introduced by Prime Minister KP Sharma Oli’s government has sparked intense debate, with critics warning that while it claims to facilitate investment, it also poses grave security threats and opens avenues for financial exploitation. The ordinance, which was passed through the Council of Ministers on January 10, has drawn opposition not only from rival political parties but also from members within the ruling Nepali Congress, who view it as a tool for serving vested interests rather than national development.

Ordinance Passed Without Parliamentary Scrutiny

The government’s decision to amend multiple laws through an ordinance—without parliamentary debate—has raised serious questions about its intent. By introducing sweeping changes to acts such as the Land Act, National Parks and Wildlife Conservation Act, Land Acquisition Act, Special Economic Zones Act, Public-Private Partnership and Investment Act, Foreign Investment and Technology Transfer Act, Forest Act, and Industrial Business Act, the Oli administration has bypassed the usual legislative process. While the government claims these changes will boost foreign investment and streamline bureaucratic hurdles, many argue that they instead undermine transparency and accountability.

One of the most controversial amendments pertains to the Foreign Investment and Technology Transfer Act, which now allows Nepali IT companies to establish branches abroad. This seemingly progressive move has, however, triggered concerns that it could lead to capital flight rather than foreign direct investment. Critics argue that instead of bringing in investment, the ordinance effectively paves the way for financial outflows, making it easier for business interests to move their money overseas under the guise of IT expansion.

Security Risks and the Role of Asgar Ali

At the heart of the controversy is former IT advisor to Prime Minister Oli, Asgar Ali, who is also the founder of Esewa and fonepay. Ali, who has been accused in the past of manipulating Nepal’s data security landscape for personal gain, has now been linked to this ordinance, with many alleging that it was crafted specifically to serve his business interests.

Ali’s company, Esewa, fonepay, holds an extensive database of Nepali citizens’ sensitive information, including banking records, passport details, citizenship records, and even security-related data. His influence over the country’s digital infrastructure has raised alarms about potential data misuse, particularly after reports surfaced that Nepal’s classified data might have been sold to foreign entities, including China and Pakistan.

The ordinance now provides a legal channel for Ali’s company to expand internationally, making it easier to transfer sensitive citizen data beyond Nepal’s borders. Cybersecurity experts and legal analysts fear that this move could compromise national security, as it weakens Nepal’s ability to regulate and monitor its own digital assets. If Nepali IT firms begin operating from abroad, there will be limited oversight over how and where crucial data is stored, raising concerns about unauthorized access and misuse.

Oli Government Under Fire for Corruption Allegations

Prime Minister Oli, already under scrutiny for alleged cronyism and policy manipulation, is facing increased pressure over the passage of this ordinance. Critics argue that his administration has been heavily influenced by business lobbies and corporate players, with decisions being made to benefit a select few rather than the general public.

The opposition has accused the Oli-led government of disregarding constitutional norms and parliamentary procedures by pushing through an ordinance that has such far-reaching implications. Even within the ruling coalition, there are growing murmurs of discontent, with some lawmakers expressing concern that Nepal’s financial and digital sovereignty is being compromised.

Some political analysts suggest that the ordinance is an extension of Oli’s broader pattern of governance, where powerful business interests dictate policies, often at the expense of transparency and public welfare. They argue that this is not merely a case of economic mismanagement but a calculated effort to allow financial elites to legally move their wealth abroad while weakening regulatory safeguards.

Public Outcry and Demand for Investigation

The passage of the ordinance has triggered widespread public outcry, particularly among cybersecurity professionals, opposition leaders, and independent economists who warn of its long-term consequences. Many have called for an immediate rollback of the provisions that allow Nepali IT firms to establish operations abroad without stringent regulatory oversight.

The demand for an independent investigation into the matter is growing, with critics urging the government to disclose the true intent behind the ordinance. There are also calls for greater scrutiny of Asgar Ali’s role in influencing digital policies, with some demanding an audit of his business dealings and possible conflicts of interest.

Meanwhile, questions are being raised about the government’s overall handling of Nepal’s digital transformation. While the nation has made significant strides in financial technology and IT infrastructure, experts argue that the absence of a strong data protection framework leaves citizens vulnerable to exploitation. They stress that any policy changes related to foreign investment and IT governance should be made through a democratic process, ensuring that national security and public interest are not sacrificed for the benefit of a few individuals.

A Dangerous Precedent for Future Governance

The IT ordinance, rather than being seen as a step forward in investment facilitation, has instead exposed deep-rooted concerns about Nepal’s regulatory weaknesses and the unchecked power of business elites over government policy. The controversy surrounding the ordinance underscores the need for greater transparency, stronger cybersecurity laws, and a commitment to protecting Nepal’s digital sovereignty.

As the debate over the ordinance intensifies, Prime Minister Oli faces one of the toughest political battles of his tenure. Whether his government will stand by the decision or be forced to backtrack under public and political pressure remains to be seen. However, what is clear is that the ordinance has already set a dangerous precedent—one that could have long-lasting implications for Nepal’s governance, economy, and national security.